Although the COALITION government committed to cutting red tape for businesses, it is stuck with putting something in place by December that gives effect to the Agency Workers Directive 2008/104/EC (the Directive). The Directive gives temporary workers (temps) the right to be treated equally in some respects as compared to employees directly hired by the end user (the hirer).
The Agency Workers Regulations 2010 (the Regulations) were drafted under the previous Labour government. The Regulations went through three consultations, following concerns about the effect that they may have on a delicate economic recovery. Shortly before the last general election, in March 2010, David Cameron tabled an early day motion calling for the Regulations to be scrapped and redrafted. Some saw this as an election ruse, as the reality was that the Regulations (and, in particular, the 12-week qualifying period) were the product of considerable and delicate negotiation. In any event, the Regulations have not been scrapped and, although their implementation has been postponed for as long as possible, they will come into force on 1 October 2011.
Temping agencies and businesses alike are concerned about what effect the Regulations will have on the use of temps. There is a danger thatthe additional compliance burden will remove the flexibility provided by this sector of the workforce. At the time of writing, the government has yet to publish guidance on how to comply with the Regulations.
Who can claim protection?
The Regulations protect temps who use agencies to find work, provided they are employed by the agency, or have entered into a contract whereby they agree to perform work and services for the agency. Temps who provide their services through ‘intermediaries’, such as umbrella or personal services companies, will also be covered.
However, the Regulations will not apply to workers employed under managed service contracts, or to the genuinely self-employed. They will also not apply in cases where temps are employed by an agency and the agency pays them at least 50% of basic pay, for a period, between assignments. This exception, the so-called ‘Swedish derogation’, is not common in the UK, but may become more so.
What are the rights?
Temps will have:
- ‘day one’ rights; and
- rights that accrue after completion of the qualifying period of 12 weeks.
Day one rights
Rights that apply from the first day of placement are:
- The right to be given information about permanent employment opportunities with the hirer. Notices or announcements in a public place (such as in staff canteens or on the intranet) should suffice, providing temps are given equal access to these facilities at the same time as other ‘comparable’ staff members.
- The right to be given access to on-site facilities and amenities (such as crèches or canteen facilities). It should be noted, however, that the Regulations only give the same rights as comparable workers, so if hirers impose minimum service requirements before allowing access to the facility or amenity, this will apply to temps as well. If there is a waiting list system in operation for certain amenities, temps will be allowed to join but not by-pass this waiting list.
Another right that accrues from day one (but which, for the purposes of this article, is not referred to as a day one right) is protection for temps who are pregnant or who have recently given birth. Temps will be entitled to paid time off to attend antenatal appointments, and hirers will need to make adjustments to provide a safe place of work. However, if a hirer is unable to provide a safe place of work for a temp, the agency must offer appropriate alternative work to the temp on terms that are not less favourable for the duration of the original assignment. If no such vacancy exists, the agency must pay the temp for the duration of the assignment.
Twelve-week rights
After completing a 12-week qualifying period (Regulation 7), temps will have the right to the same basic working and employment conditions as are ordinarily included in the contracts of comparable workers recruited directly by the hirer.
Basic terms include pay, length of working time, rest periods, rest breaks and annual leave. They will not include such terms as the provision of private healthcare or contractual notice periods.
‘Pay’ here includes holiday pay, overtime, shift allowances and bonuses for individual performance (including commission and other formulaic bonuses, payable by reference to productivity or performance). However, ‘pay’ does not include payments to reward loyalty or long-term service (Regulation 6(3)). Therefore, agencies do not need to match participation in long-term incentive schemes, share options or profit-sharing schemes. ‘Pay’ also does not include occupational sick pay, pension payments, redundancy and maternity pay.
Given that the Regulations cover terms that are ‘ordinarily included’ in comparable contracts means that temps will be able to enjoy equality not only in relation to express contractual terms, but also terms implied by custom and practice or incorporated in employee handbooks or collective agreements (Regulation 5(3)(b)).
Qualifying period
The 12-week clock runs continuously if temps work for the same hirer in the same role on one or more connected assignments without a break. Breaks of up to six weeks will not reset the clock. If, however, a new assignment with the hirer begins during the 12-week period and the whole or main part of the work or duties in the temp’s role are substantially different from the previous assignment, the clock will reset. It will be presumed that the individual is still in the same role on a new assignment unless the agency informs the worker in writing of the changes to the role.
Given the fact that the 12-weeks continue to accrue for temps working on successive assignments, temp agencies would be well advised to check with the temp to find out whether they have worked with the hirer before and, if so, in what capacity.
The 12-week clock will be stopped but not reset in certain circumstances, including if the temp is absent due to sickness, annual leave, pregnancy, childbirth, maternity, paternity or adoption leave for up to 26 weeks after childbirth, or jury service of up to 28 weeks.
If an agency deliberately structures assignments in such a way as to reset the 12-week clock, temps may be entitled to an additional award of up to £5,000.
Comparators
For a temp to succeed in any claim, they must point to specific terms in the contract of a person recruited directly by the hirer that are more favourable than their own. If the hirer or agency can point to an actual comparator who is doing broadly similar work in the same business and is paid the same as the temp, the Regulations will be deemed to have been complied with.
There is nothing explicit in the Regulations which confirms that a hypothetical comparator may be used to support a temp’s claim. However, the government’s response to the second consultation stated that the consultation would ‘often entail comparison with a flesh and blood comparator’ (emphasis added), which could suggest a hypothetical comparator was possible. However, the government also gave the example, in the same document, of a company hiring a temp as a receptionist. In the example, the company has never had a receptionist before and does not have defined pay scales or collective agreements, and therefore no right to equal treatment arises (save in relation to terms common to the whole workforce).
Information requests
Regulation 16(1) allows the agency worker to submit a written request for information to the agency regarding:
- the hirer’s basic working and employment conditions;
- how the temp’s terms and conditions were determined after the qualifying period; and
- the basic working and employment conditions that apply to comparable employees.
The agency has 28 days to comply with the request. If it fails to do so, the temp may then request this information directly from the hirer, who then also has 28 days to comply.
Temps can also request information relating to their day one rights from hirers (without having to ask the agency first).
As with discrimination questionnaires, a failure to respond or an inadequate response to an information request from a temp does not itself give rise to any remedy or compensation. However, the Employment Tribunal is entitled to draw an adverse inference from the failure (Regulation 16(9)).
Liabilities
The Employment Tribunal will apportion liability for any failure to comply with the Regulations, based on the extent to which the agency or the hirer is in breach. As only the hirer is in a position to provide the temp with their day one rights, only the hirer can be liable for an infringement of such rights. However, the position in relation to 12-week rights is more complicated.
Agencies are primarily liable for a failure to provide a temp with a 12-week right. However, Regulation 14 provides an agency with a defence if the agency can show that it took reasonable steps to obtain the information required to comply with its obligations, and acted reasonably in using this information when determining the terms and conditions of the temp following the qualifying period.
Readers familiar with the information and consultation requirements of the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE 2006) will note some similarities here – the transferee’s failure to provide a measures letter gives the transferor a defence to claims of failures to consult. However, unlike TUPE 2006, there is no requirement on hirers to provide the equivalent of employee liability information to the agency: the government believed that the ‘reasonable steps’ defence available to agencies will deter hirers from failing to provide information and it therefore did not include a positive obligation on hirers.
Remedies
Claims under the Regulations will be heard in the Employment Tribunal and must be brought within three months of the act complained of (unless the Tribunal considers it just and equitable to extend the deadline).
If a temp brings a claim against either the agency or the hirer, but not both, the Tribunal may use its powers to join the agency or hirer (as appropriate) if it considers that the claimant may be disadvantaged (for instance, if the agency runs a Regulation 14 defence).
Temps are also protected from victimisation as a result of asserting rights under the Regulations. If they are an employee of the agency and are dismissed because they have asserted their rights, the dismissal will be unfair.
The Tribunal has several remedies at its disposal. It may award compensation, and/or make declarations and recommendations to agencies and hirers. While injury to feelings awards are expressly excluded for failures to provide day one or 12-week rights (Regulation 18(15)), the Regulations are silent as to whether they are available in cases of victimisation.
Other provisions in the Regulations
Part 1 of Schedule 2 to the Regulations also contains numerous other amendments to existing legislation, in addition to amendments to the Employment Rights Act 1996, in relation to pregnancy and maternity (described above). These deal mainly with the representation of temps in a business’s workforce. For instance, temps will form part of the agency’s (and not the hirer’s) staff for purposes of determining the numbers of workers employed for statutory recognition procedures and the threshold applicable to information and consultation obligations. ‘Suitable information’ must also be given to appropriate representatives under the Trade Union and Labour Relations (Consolidation) Act 1992, the Information and Consultation of Employees Regulations 2004 and TUPE 2006. ‘Suitable information’ means information relating to the number of temps engaged by the hirer, the type of work being carried out by the temps and the areas of the business in which they are working. Interestingly, the obligation under TUPE 2006 is to provide information to the employee representatives, as opposed to amending the employee liability information provisions that require information to be passed between transferor and transferee. Accordingly, the transferee cannot complain under Regulation 12 of TUPE 2006 if they are not given information about any potential liability relating to temps.
Conclusion
The Regulations are likely to have a significant effect on the way that businesses use temps and the relationships that businesses have with agencies. It is likely that agencies will feel that the government’s promise to reduce the amount of red tape faced by business does not apply to them.
By Mark Levine, partner and Will Winch, solicitor, Mishcon de Reya.
